Meridian Automotive obtains court approval of disclosure plan

By Jennifer Lanning Drey

Eugene, Ore., July 21 - Meridian Automotive Systems obtained court approval of its disclosure statement for its plan of reorganization on Friday, according to a company news release.

The company expects a confirmation hearing to be scheduled for Sept. 13 and the plan to become effective Sept. 29, according to the release.

"We are pleased to have received the bankruptcy court's approval of our disclosure statement today, which allows us to move closer to our ultimate emergence from Chapter 11. We are extremely pleased to have the support of our major creditor constituencies," said Richard E. Newsted, Meridian's president and chief executive officer, in the release.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of $303.4 million in pre-bankruptcy first-lien claims who vote to accept the plan will receive either 80% in cash and 20% in class A convertible preferred stock or 95% in cash plus a consent fee.

• Holders of $55 million in pre-bankruptcy second-lien secured claims will receive their share of new common stock in the reorganized company, rights to purchase their share in the class A convertible preferred stock not purchased by first-lien claimants, and their share of an $8 million total commitment fee, payable in class A convertible preferred stock, under a preferred equity funding agreement;

• Holders of $125 million in pre-bankruptcy second-lien deficiency claims will receive their share of pre-bankruptcy second-lien claim trust interests, which will entitle them to receive cash recoveries on some avoidance actions contributed to a litigation trust;

• Holders of $96 million in general unsecured claims will receive their share of general unsecured claims trust interests and contingent value rights;

• Holders of $172.9 million in pre-bankruptcy subordinated claims will receive their share of subordinated claims trust interests, funded by avoidance action and reserve action net cash recoveries and litigation trust distributions and their share of contingent value rights after all first-lien and second-lien claims have been paid;

• Holders of old Meridian interests will receive no distribution under the plan.

Meridian said it plans to obtain up to $375 million in exit financing, including a $75 million revolving line of credit, a $125 million tranche A term loan plus a $25 million synthetic letter-of-credit facility and a $150 million tranche B term loan.

Meridian, a Dearborn, Mich., supplier of lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers, filed for bankruptcy on April 26, 2005. Its Chapter 11 case number is 05-11168.

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